China Securities Regulatory Commission(CSRC) has formally approved Dalian Commodity Exchange (DCE) to launch RBD Palm Olein options trading and open to the overseas investors. The relevant matters are hereby released:
I. Listing and Trading Time
RBD Palm Olein options will be listed for trading on June 18, 2021 (Friday) and open to the overseas investors. On the listing day, call auction will be from 8:55 to 9:00., and the opening time will be at 9:00. Night trading session will begin on June 18, 2021 (Friday). Trading hours of RBD Palm Olein options will be the same as the underlying futures.
II. Contracts Listed for Trading
The first batch of option contracts listed for trading includes the RBD Palm Olein Options contracts with P2109, P2110, P2111, P2112, P2201, P2202, P2203, P2204, P2205 and P2206 as the underlying futures contracts.
III. Listing Benchmark Prices
The listing benchmark prices of the newly-listed options contracts are calculated based on the BAW American futures options pricing model. The interest rate in the model is the one-year time deposit benchmark interest rate, and the volatility is the 90-day historical volatility of the underlying futures contract. The listing benchmark prices of newly listed RBD Palm Olein options contracts will be released together with the settlement data through the member service system after the settlement on the trading day prior to the listing day, and will also be available for inquiry on the DCE website.
IV. Trading Order
At the initial phase of listing RBD Palm Olein options, DCE will only offer the limit order and stop limit order. The maximum bid/offer quantity of each trading order of the option contract is 1,000 lots (the same as that for the underlying futures contract).
V. Exercise and Fulfillment
During the trading hours of any trading day and between 15:00 to 15:30 on the expiration date, clients may submit application for exercise, hedging liquidation of the two-way options positions, hedging liquidation of the two-way futures positions following exercise or fulfillment.
During the trading hours of the expiration date and between 15:00 to 15:30 on the expiration date, clients may submit application for canceling automatic exercise of options.
VI. Position Limit
Option contracts and underlying futures contracts apply separate position limits. With respect to the option contract of a particular month held by the Non-Futures Company Member and the client, neither the sum of the buying open interest of all call options and the selling open interest of all put options, nor the sum of buying open interest of all put options and the selling open interest of all call options may exceed 10000 lots. The accounts with actual control relationship shall be regarded as one account.
VII. Foreign Currency as Margins
Overseas investors can use RMB, standard warehouse receipt, China’s government bond and foreign currency funds as margins.
At present, USD is the foreign currency that can be used as margins, with a haircut of 5%. Before the market close of each trading day, DCE will use the central parity rate of RMB announced by China Foreign Exchange Trade System (CFETS) on the previous trading day as the benchmark price to calculate the market value of foreign currency funds. When settling on the then-current day, the central parity rate of RMB on such day announced by CFETS will be used as the benchmark price to adjust the market value and discounted amount of foreign currency funds.
VIII. Related Fees
The trading fee of RBD palm olein options is 0.5 CNY/lot, and the exercise (fulfillment) fee is 1 CNY/lot.
IX. Quotation Inquiry
The market maker mechanism is implemented in the trading of RBD palm olein options. Non-Futures Company Members or clients may submit a quotation inquiry to the market makers on non continuous-quotation contracts. Continuous-quotation contracts shall be subject to releases on DCE website. The quotation inquiry shall specify the contract symbol of the option contract. The interval between each quotation inquiry on the same option contract should not be less than 60 seconds. The largest number of quotation inquiries under the same trading code on each options product is 500 per day.
All entities concerned are required to effectively make necessary preparations and improve risk management measures to ensure the smooth operation of the market.
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